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Budget

Budget

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Published by Ambalika Smiti

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Published by: Ambalika Smiti on Mar 29, 2011
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03/29/2011

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BUDGET
Budget is a statement of estimated receipts and expenditure of the governmentfor the ensuing fiscal year (i.e. 1 April to 31
st
March). It is also known as 'AnnualFinancial Statement'. As per article 112 of the constitution, the President shall cause tobe laida financial statement before both the Houses of Parliament at the commencement of every financial year of the estimated receipts and expenditure of the government for thatyear. Article 202 of the constitution provides that a similar financial statement for eachstate will be placed before the legislature of the respective state.The annual budget statement presents four kinds of estimates:(1) Actual estimates of the preceding year (2) Budget estimates of the current year (3) Revised estimates of the current year (4) Budget estimates for the proceeding year The budget shows the receipts and expenditure of the government (centre and states)under three heads:(1)
Consolidated Fund:-
 
It is the main account of the government and it consists of allthe receipts of the government from taxes, loans and other receipts. No amount can bespent without prior sanction of the Parliament (or state legislature).(2)
Contigency Fund:-
It consists of the sum placed at the disposal of the President tomeet unforeseen expenditure. The prior sanction of the Parliament or state legislature isnot required under this fund but it is sought to replenish the fund.(3)
Public Account:-
It consists of all receipts and payments which are in the nature of adeposit account with the government such as small savings, provident funds etc. Nolegislative sanction is required for withdrawal of money from this fund as it does notbelong to the government and comes under the public account.The presentation of Budget is followed by a general discussion on it in both theHouses of 
 
Parliament. Estimates of expenditure from the Consolidated Fund of Indiaare placed before the Lok Sabha in the form of 'Demand of Grants’. All withdrawals of money from the consolidated Fund are therefore authorized by an appropriation Actpassed by the Parliament every year. Tax proposals of the budget are embodied in a billwhich is passed as the 'Finance Act' of the year. Estimate of receipts and expenditureare similarly presented by the state governments in their legislature before the beginningof the financial year.
Union Finance Minister's speech:-
 
Finance minister's speech gives a broad overviewof the Budget proposals. Generally it is in two parts. The first deals with a review of implementation of the preceding year's schemes, revised estimates for the completedyear and the budget estimate for the next year, without taking into account the impact of budget proposals. Part two of the speech deals with revenue mobilization through taxproposals.
Annual Financial Statement :-
Annual Financial Statement (AFS) is the main Budgetdocument. Under Article 112 of the Constitution, a statement of estimated receipts andexpenditure of the Government of India has to be laid before the Parliament in respect of every financial year from 1 April to 31 March. It shows the receipts and payments of government under three accounts - Consolidated Fund, Contingency Fund and thePublic Account.
Demands for Grants:-
 
The estimates of expenditure from the Consolidated Fund,included in the Annual Financial Statement and required to be voted by the Lok Sabha,
 
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are submitted in the form of Demands for Grants in pursuance of article 113 of theConstitution. Generally, one Demand for Grant is presented in respect of each ministryor department.
Budget at a glance:-
The Budget at a glance gives an overview of the budgetaryproposals. It gives a break up of tax and other receipts as well as expenditures (plan andnon-plan), allocations of outlays by ministries and resource transfers to states and UTs,the projections on revenue deficit, fiscal deficit and primary deficit, ,etc.
Finance Bill:-
The proposals of government for levy of new taxes, modification of theexisting tax structure or continuance of the existing tax structure are submitted to theParliament through the Finance Bill. To facilitate easy comprehension of the budget,certain explanatory documents are presented along with the budget.
Appropriation Bill:-
After the Lok Sabha votes on the Demands for Grants, Parliament'sapproval to the withdrawal from the Consolidated Fund of the amounts so voted and of the amount required to meet the expenditure 'charged' on the Consolidated Fund issought through the Appropriation Bill.
Structure of the Budget
 Structure of the Budget refers to the components of the budget. It has two broadcomponents:(a) Budget Receipts (b) Budget Expenditure.
(a) Budget Receipts
refer to estimated money receipts of the government from allsources during the fiscal year. Broadly, the budget receipts are classified as:
(i) Revenue Receipts:-
Such receipts accrue to the government on account of its currentactivities and are generally recurrent innature. For example tax receipts like income tax, excise tax etc. and non-tax revenuereceipts like income from PSUs, interest received etc.
(ii) Capital Receipts:-
 
Such receipts either create liabilities (like borrowings) or reduceassets like disinvestment, recovery of loans etc.
(b) Budget Expenditure:- 
refers to the estimated expenditure of the government on itsdevelopmental and non-developmental programmes (or on its plan and non-planprogrammes) during the fiscal year. Budget expenditure is also classified into two broadcategories:
(i) Revenue Expenditure:-
Such expenditure is incurred on day-to-day activities of thegovernment and neither create assets nor reduce liabilities eg. interest payments,subsidies etc.
(ii) Capital Expenditure:-
Such expenditure either creates asset or reduces liability of thegovernment eg. expenditure on construction of road, bridge, building etc.
 
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Zero Based Budgeting (ZBB)
: This concept was propounded by Peter Phyrr. Under this the financial requirements of various departments are analysed, evaluated andjustified annually afresh i.e. on the assumption that there was no budget in the earlier years. Thus each head of expenditure is justified on its merit and unnecessary ternscontinuing from the past are discontinued. It has been adopted in India since 1987 as ameans to control public expenditure.
Performance (and Programme) Budgeting
: A budget which presents the purpose for which funds are required, cost of programmes proposed and quantitative criteria for measuring the accomplishments under each programme. India adopted performancebudgeting In 1969. Since then performance budgets for various departments areprepared and submitted to parliament as supplementary documents to the traditionalbudget.
Outcome Budget 2005-06
 The Union Finance Minister, Mr. P. Chidambaram presented the first ever outcomeBudget 2005-06 on August 25, 2005 in the Parliament. The 723 page document, is acompilation of the intended and anticipated outcomes, as identified by the 44 Ministriesand their respective departments, sought to be achieved through the allocations made inthe Budget for the current fiscal. It excludes the targets of nine Ministries such as AtomicEnergy, Defence, External Affairs and Parliamentary Affairs.
Outcome Budget
An outcome budget is a variant of performance budget. It is an exercise of convertingthe financial outlays into physical outcomes, with fixed quarterly measurable andmonitorable targets, to improve the quality of implementation of developmentalprogrammes. The outcome budget measures the development outcomes of allgovernment programmes. For instance it will tell a citizen if money has been allocated

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